I finally got to the bottom of this. The error lights were indicating a problem with the boost pressure control module, which is one of the four computers under the cover on the passenger side of the car under the hood, near the firewall.

It is the third module, the one with the hose running into it.

Cost for a new one from Alpina: $3100 US!

Fortunately Porsche used the same module in the 944 Turbo and Turbo S, part numbers 951.618.113.02 and 951.618.113.09 - either will work. These are available on eBay and I got one for about $250. I swapped the eprom with the one from my Alpina and voila, error message gone!

Members of the German forum alpina-forum.de were invaluable in troubleshooting this problem. You can read the full discussion here:

I meant the ECU. The pressure sensor is supposed to be identical too I think, but the ECU I got had a different pressure sensor (maybe the previous owner changed it?). But I previously also purchased the proper pressure sensor.

I think your problem is different. I came across what you're describing on the M5board forum. Yours might be related to the instrument cluster actually.

Its been a while, but I'm pretty sure the LED light goes out when driving. I've had this issue for about 2 years now and the problem started with a hesitation under throttle, was intermittent and got worse over time. It won't boost at all and hits a wall as soon as boost comes on, at 1.0 bar, it shuts down.

I've been diagnosing this with the help of the M5board, especially Tomba who has been very helpful, but haven't managed to find the problem.

Haven't tried swapping out the cluster yet, but will give that a go, will need to find an old cluster to swap in.